Binance has received a notice from Japan’s Financial Services Agency Supervision Bureau, warning the Hong Kong-based exchange that it must register with the authorities, in accordance with the relevant trading regulations.

The letter does not threaten police enforcement action at this stage, contrary to the report published yesterday by Nikkei.

Failure to register could result in closure although that sanction has not been invoked for any other unregistered exchange in the country, although Binance being a foreign company is possibly in a more vulnerable position.

Binance chief executive Changpeng Zhao complained on Twitter that it “does not make sense” to tell the media before the company concerned, and today says Binance lawyers have called the FSA to “find a solution”.

Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.

The full text of the warning letter is reproduced below (Google Translates):

About persons who do not register and perform virtual currency exchange business (Binance)

Regarding persons who do not register and carry out the virtual currency exchange business, we made a warning today under the administrative guideline third volume: financial company relationship 16. Virtual currency exchange trader III – 1 – 4 (2) 2, We announce it as follows.
· Industry name etc: Binance
Representative Changpeng Zhao (Chao Chan)
· Location: Hong Kong
· Contents, etc.: Through the Internet, resident of Japan as opponent, temporary
Things that were doing currency exchange business
※ The above is stated based on information on the Internet, “supplier name, etc.” “location or address” may not be the current one.

Binance is my ne of the largest crypto exchanges and although based in Hong Kong, moved some operations to Japan following China’s exchange and ICO ban. According to Zhao in an interview with a Bloomberg, Binance has a network of servers and company registrations in a number of other countries.

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Gary is a cryptocurrency analyst at interactive investor, the UK’s second-largest stockbroker. He has been writing professionally about cryptocurrency since 2013, when he initiated bitcoin coverage at Money Observer, one of the UK’s most respected investment magazines. Gary writes for EWN in a personal capacity and his contributions should not be taken as investment advice.